Wednesday, July 16, 2008

What to do with money

First the disclaimer. This should not be construed as financial advice. Consult your financial planner - I'm sure you have one, right :)?

Money is a tricky topic, here in the US. It's all very hush-hush. No one talks about how much they make, even to their children or parents. Usually the spouse is the only one who knows all the details. Sometimes money has a very negative connotation - "filthy rich", "dirty money", and all that.

Despite that, money is what we use as a substitute or stand in for freedom, security, and social acceptance. Naturally, when we begin to understand that our economy, based on infinite growth and ever-growing energy, is unsustainable, we worry about what is going to happen to our money.

So here are some thoughts about different ways to approach Peak Oil - wise investing.

1. Stay the Course

You have decided to stick with conventional wisdom. 401K, IRA, bank, etc. You are trying to pay down debt, pay off the house and fund a 12-month emergency fund, on top of the standard retirement accounts. This is for people who just can't bring themselves to give up on the system.

2. Pull the Ripcord

You've had enough of the rollercoaster and you can see that the financial system is deteriorating. You put all (or a whole lot) of your money in cash and some is in fact under the mattress - you never know when the grid is going down, and credit cards will be no good then. You may not have a retirement fund, but at least you'll be able to pay the bills and the property taxes.

3. Goldbug

Well, the Fed has gone and done it - the dollar seems to be hitting new lows every month. You believe that there is no way for the government to pay off their insane debts except to try to print their way out. Which will of course, make the dollar nearly worthless. See, Zimbabwe. See, Confederate gov't. See, Weimar Republic. See, Roman empire. The only timeless form of money you want to own is gold and silver, either physically or in an ETF.

4. Bet big

In the ashes of every empire is a way to make a whole heck of a lot of money. You are into commodities, reverse index funds, and oil service corporations. This is definitely high risk, and potential high reward. Or, potential bankruptcy.

5. Back to basics

Regardless of what happens, you will be eating well and clothing your kids. You have decided to opt out of the peak oil investment debate and put your money into physical goods. Get your house in order, with energy efficient windows and insulation, non-electrical appliances, and lots and lots of stored goods. Wheat berries, rice, oats, beans, toilet paper, soap, and shoes. "Invest" in the gifts that keep on giving - gardens, orchards, community solidarity, books, and skills like preserving the harvest and homebrewing. "Invest" in tradeable goods that will be valuable after TSHTF - like alcohol or whatever.

6. Invest in a trade
You want to have something to do after the peak - besides your worthless job now. You are learning how to be a carpenter, an herbalist, or whatever. You've got the tools, you've got the talent.

7. Diversify
Who the heck knows what's going to happen? You do a little of everything and hope it all turns out.

So, dear readers, what did I miss? What other options are there available and which is your favorite?


Verde said...

Oh, Oh, I'll take curtain #5! I'm cranking out the wheat several times a week and take my Leaman's catelogue with me to read rather than a "Cosmo" magazine.

MeadowLark said...

I'm hedging my bets... a little bit of everything ;)

1. Still investing
2. Have a goodly sum of cash tucked away
3. Glad I have the family silver
4. Feel bad about making money off other people's suffering, so NO.
5. Garden moving along. Basement storage filling up. And most people know how I feel about stockpiling whiskey ;)
6. I own the foxfire books... isn't that like investing in a trade?
7. Isn't that what I just said? :)

Lewru said...

I don't know. I'm very ostrich-like about the money question seeing as I am indentured to Sallie Mae. But I know I have skills and I know I'm resourceful so I'm not freaking out. Yet.

Tara said...

I'm not worried about now. I'm worried about what happens when I turn 65 or 70 (or maybe even younger than that) and can no longer earn any income, but then I continue to live to 80 or 90 - what on earth do I do during those one or two intervening decades?? Hubby feels the same - hard to know what will happen. So we've decided to not keep all our eggs in one basket and try a little of everything.

I'll keep my investments but back down on the contributions (maybe also move them into a more stable but slower growth portfolio). We've definitely got the "stuff" part working, our savings is drained from the move, but we'll build that back up, plus stash some cash. We were a mere couple of months from being debt-free before the move, now we've added a few months back on, but we can dig our way out of that no problem.

Our old house, which we're now renting to my brother, will be paid off in a year and the taxes on it are peanuts, so anything we make on it after that will just be gravy. And even though I have no desire whatsoever to move back into it, it IS comforting to know that we'll own a house outright. Sorry for the ramble.

Melissa said...

I think I'm definitely hedging my bets with a little of everything...especially since my husband and I have different ideas about what will happen in the next few years. The only thing we really agree on is that it's important not to carry debt and it's important to save for the is the big question!